‘War’ rhetoric in press twists trade truth

By Steven Suranovic Source:Global Times Published: 2016-6-6 19:48:02

Illustration: Liu Rui/GT

Recently, accusatory rhetoric by US presidential candidates, together with a series of trade disputes between China and the US, is likely to put continuing strain on Sino-US economic relations leading up to the US presidential election in November. A better-informed public is needed to prevent things from getting out of hand, but achieving that may be impossible. 

In the past months, the US has filed a WTO case against China on the use of high tariffs on chicken imports, has implemented anti-dumping and countervailing duties of over 500 percent on cold-rolled flat steel imports from China, and has initiated a Section 337 action against China charging Chinese steel firms with conspiring to fix prices and stealing trade secrets.  

All of these actions can be seen as evidence that both the US and China are continuing to apply legal trade remedy actions against each other to protect domestic industries. When disagreements arise, they use the allowable dispute procedures at the WTO to come to an acceptable resolution. But instead of presenting a benign view of these actions, news stories tend to fan the flames of anti-China opinion in the US; headlines pronouncing trade frictions, skirmishes, and wars between the countries all suggest that China is an unfair trader because it does not follow the rules of international trade. The general US public worries about China becoming stronger militarily and believes that China is untrustworthy and responsible for a considerable amount of US job losses.  

But public opinion, which political pundits claim politicians are responding to, is greatly influenced by how China issues are presented by the popular media. It is important to recognize that media can both inform and obscure at the same time. As I read over the different stories about these issues written in the US press recently, there are several things worth noting. 

First, most stories have limited space and as a consequence do not provide any historical context to help readers understand the actions being taken. For example, most readers will not know how the WTO dispute process works, or how often different countries are taken to the WTO court and charged with violating their trade commitments.

China is often heralded as an unfair trader in these stories because it is charged with failing to live up to its WTO commitments. However, rarely do news stories highlight useful comparisons to put this into context. For example, since 2010 China saw 17 complaints for failing to live up to WTO commitments. During the same period the US saw 19 complaints. 

Furthermore, a complaint itself is not automatically a violation. Instead, it is the beginning of an investigation that may take a year or more to decide whether the country failed to live up to its commitments or not. If the country is found to have violated its commitments, it is given a chance to rectify the situation. In most previous cases, in both China and the US, a negative decision has resulted in the adjustment of policies and compliance with the rulings of the WTO's dispute settlement body. In other words, both countries have tended to honor their commitments. But, not always.

The most recent US case against China at the WTO involves a complaint that China has failed to live up to its promises in respect to an earlier WTO ruling against it on tariffs on chicken broiler part imports. In other words, the US is claiming that China has not adequately implemented the changes it had promised to make. Whether this charge is valid or not is not yet known since it will take an investigation by the WTO to determine its verity. 

However, even if China is found not to have lived up to its commitments, this case is not unlike actions taken by the US in other circumstances. For example, in numerous cases in the past decade the US has been found to be in violation of its commitments to the WTO for using the practice of zeroing in the calculation of antidumping margins.  The US eventually and somewhat reluctantly agreed to comply with the WTO rulings. However, in implementing the changes, the US decided to apply the acceptable procedures only on new anti-dumping cases and not to recalculate tariffs for earlier cases that used the prohibited methods. This failure to fully comply led some countries to initiate new disputes against the US because it only partially complied with the WTO ruling. 

Thus, the charges of unfair trade practices against China are similar to actions the US has committed before as well. Even if China's is found to have acted unfairly in this case, the US has clearly acted unfairly in other cases. Nonetheless, I would speculate that if the US public were asked whether the US, or China, or both, engage in unfair trade practices, they would indubitably claim that China is the unfair trader. If asked directly if the US is unfair trader, most Americans would say of course not. 

A second issue that affects US public opinion on trade issues is the type of rhetoric used in some news stories.  Readers will be more inclined to read an article if it grabs their attention in some interesting way.

The Financial Times of London, typically a good source for economic news, reported on the US-WTO action against China on chicken tariffs with the title, "US and China skirmish as trade clash looms." Casting trade actions as some sort of battle or trade war is certainly more interesting than saying the US has initiated some allowable administrative legal complaints about China's implementation of an earlier WTO dispute case. However, the Financial Times' rhetoric is mild compared to that of Republican presidential candidate Donald Trump, who claimed in early May that China was "raping" America with its "unfair trade policies."     

News services and politicians would serve the public better if they would learn more from the experts who understand the broader context of a situation and then try to convey, what is usually a more complex and richer situation, to their readers and supporters. Unfortunately though, news stories gain more attention by embellishing the conflict aspects of trade and restricting expert opinion to short snippets.  

Politicians have a similar incentive to adapt their rhetoric to gain the greatest attention. Also, at least one political candidate, Donald Trump, seems to believe that he himself is the expert on all economic and trade matters.  

For these reasons, correcting the incentives in the system will be very difficult, if not impossible, to achieve. It is interesting to note though, how in an era when more information is available at our fingertips than ever before, the public can still remain misinformed about important matters.  

The author is professor of economics and international affairs at Elliott School of International Affairs, George Washington University. opinion@globaltimes.com.cn



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